John Philip Mason is a residential appraiser with 20 years experience and covers the Hudson Valley region of New York. He’s a good friend and a true professional who believes that all appraisers need to have a macro-economic perspective in order to be effective. This week, he wonders why real estate and for that matter, pundits of all markets feel obligated to predict the future, in his Solid Masonry post. Of course, John is just itching to say: “the entry-level market is going to decline .013% this quarter” just kiddin’ John!…Jonathan Miller
They say a little bit of knowledge is dangerous. If so, then these are pretty dangerous times. Suddenly everyone, including the lady with the alligator purse, is a real estate expert and is charging to the forefront with all kinds of verbiage as to where the market is heading. It’s going up, down, sideways, coming in for a soft landing, heading for a crash, slowing up, slowing down, bottoming out, rebounding, taking a breather, collapsing, presents a buying opportunity, spells of economic disaster, and god knows what else.
Now there is no doubt market reports which present a snap-shot of past trends offer an insight as to where we are, historically speaking. It’s great to see how markets have evolved, developed, shifted and so forth, in concert with changes to the economy, demographics, needs and wants of market participants, etc. I personally have learned a great deal from the statistics, as well as the insights of others. Add to the fact that almost everyone, even those who don’t own real estate, follows the most popular market indicator of all time, the median price of homes, and you have some interesting reading.
While there is nothing wrong with throwing out some short-term predictions to where we “might” be headed in the next 1-2 quarters, some of us have gotten a little full of ourselves by projecting years into the future. In all fairness, sometimes we “experts” are prodded into coming up with something, anything, as so many folks are asking about the future and want answers. And yes, I’m sure I’ve done my share of contributing to the problem, both as the seeker and the seer. It’s kind of funny when you realize most of us have a hard time explaining the past trends, even well after the fact. I personally never would have predicted the New York metropolitan area would see steady price gains from 1994 through 2005 at the rates of appreciation we achieved. And I still can’t fully explain it all, as these trends far out-paced the regional economy.
It’s like the weatherperson giving us an accurate 7-10 day forecast, when their odds of getting the 3-day forecast right is about 50-50. Let’s be real here. Just tell what weather I’m bound to face in the morning when I leave my house, followed by a reasonable guestimate for the remainder of the day, and that’s it. When I get home tomorrow night, I promise, we can do the whole thing over again. This way, we can devote more news program time to the things we love: like news (unless someone is predicting the outcome of the elections), or sports, (assuming their not predicting who’s going to the super-bowl during the opening week of the season), or.
So is it a trick or a treat; why must everyone try to predict the future?
[Editor’s Note: Since I write a lot of market studies, here’s the answer: because its a basic human instinct for survival. We want to know if the meteor is going to hit the planet or the hurricane is going to hit the coast. I am asked about the direction of the real estate market every single day. Of course I never predict the long term because its not possible and get flack in my Three Cents Worth posts for Curbed for not doing so, but you can provide the tools to let people predict themselves because they want to. It provides a sense of control, of determining your own fate, accurate or not. The problem with real estate is that for years, so many real estate professionals have been predicting an up market (that was relatively easy), that the negativity of some pundits in the media seems like salt in the wounds to those who make their living in real estate. Well, you can’t have it both ways.]